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RCKS, Thanks. I even wonder what to heck we are doing up at this level.
".....BKX did reach an inflection point and has reacted to it, so we have to at least stay open to the possibility that might develop into something more serious, though bears do have more work to do first."
http://www.pretzelcharts.com/
"Months ago, this market reached that point where all of us stopped talking about bear options with any conviction, and we're probably all still there. Maybe rightly so. Or maybe that alone is starting to mean something ("I subscribe to the law of contrary public opinion. If everyone thinks one thing, then I say: bet the other way." -- Al Pacino in Glengarry Glen Ross, unintentionally outlining a layman's version of Contrarian Investing). In any case, for now, I'll continue the established tradition of speaking about bear options only in hushed tones.
So, while there are still more questions than answers about this market, it is interesting to watch BKX react to the old blue horizontal and (C)/(3) labels:"
"When I drew that blue horizontal months ago, I did place it where it is because I suspected it would act as resistance, so it would be premature to claim the 2/B count has completed, but it's interesting, nonetheless.
INDU still has some interesting options as well:"
"But, of course, for those above options to start being given any additional consideration, bears still have work to do in the near-term first:"
"In conclusion, BKX did reach an inflection point and has reacted to it, so we have to at least stay open to the possibility that might develop into something more serious, though bears do have more work to do first. Trade safe"
Stock Market Commentary 03/22/24
By Lawrence G. McMillan
Lawrence G. McMillan | McMillan Analysis Corp.
This market continues to show an amazing amount of bullish strength. After having trouble at the 5180 level for about a week, $SPX broke on through after the FOMC meeting and is trading at new all-time highs once again. The 5180 levels is now support. There is further support at 5050, and since $SPX did some "work" in that 5050-5180 area for a few weeks, it is a solid support area throughout as well as the launch pad for this new leg of the rally.
$SPX has now made a new all-time high on 20 separate trading days since first achieving that status back on January 19th (the previous all-time high, near 4800, had been registered at the beginning of the 2022 bear market, in January 2022).
Equity-only put-call ratios continue to hover near the bottom of their charts. That means they are overbought. However, as far as generating tradeable sell signals, they have not confirmed that. Yes, there has been a slight rise over the past couple of weeks from both ratios, but a gentle rise is not a sell signal in my opinion.
Breadth rebounded strongly this week after the oscillators were hovering on the verge of sell signals a week ago.
$VIX didn't really even get very excited about the CPI numbers or the FOMC announcement. So, $VIX remains at low levels, and that is benign -- meaning that stocks can continue to rise while that is the case.
In summary, we are maintaining our "core" bullish position, because of the strongly positive nature of the $SPX chart. We are rolling SPY calls up as they become deeply in-the-money (all of our positions were rolled up this week after the breakout to new highs). We will trade other confirmed signals around that "core" position, but so far there have not been any confirmed sell signals."
https://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1711405840486
https://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1711405840486
https://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1711405840486
https://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1711405840486
You Need To Understand NOW What Changed After The Fed Announcement
MARCH 24, 2024 AT 03:00 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/03/you-need-to-understand-now-wha-661.html
"I've always liked to look at certain points during a bull market or bear market where the character of the market could change based on key fundamental news. We were at one of those points on Wednesday as 2 o'clock approached. The Fed was about to deliver their latest policy statement and traders were on pins and needles. Questions were swirling about what the Fed might say, and do, given the February Core CPI and Core PPI numbers that were reported higher than expected. The Fed already has squashed the bulls once recently, when they shot down the possibility of a March 2024 rate cut after expectations were building for exactly that. There were still the 3 rate cuts supposed to occur in 2024, but the Fed told us that higher rates would remain a bit longer.
Most traders are not blessed with great patience. Things could have turned ugly this past Wednesday at 2pm ET if the Fed decided to wait even longer to lower rates, possibly cutting the expected number of rate cuts from 3 down to some lower number. And what might happen if the Fed did an "about face" and said something that might indicate they'd have to reconsider hiking again? After all, this Fed hasn't exactly been consistent in its discussion about interest rates.
Well, a lot of that anxiety came to an end on Wednesday as the Fed stuck to its previous guidance, despite the higher inflation reports the week prior. The stock market NEVER performs well when uncertainty is rising, but it generally does quite well when that anxiety is diminished. So at the moment the Fed indicated that nothing had really changed in their view, the stock market screamed higher, with the small cap IWM quickly testing overhead price resistance:"
https://d.stockcharts.com/img/articles/2024/03/24/aacf2f66-16ab-4155-883d-8be8f705bf9a.jpg
"This was the chart I sent to EB members in my Daily Market Report on Thursday. Small caps received the news it was looking for and reacted according - to the upside. But the closing breakout never occurred on Thursday and that false breakout led to some profit taking on Friday. It'll be interesting to see where small caps head this week. Since 1987, the annualized return for the IWM over the next 7 days is 41.20%, more than 4 times its average annual return. This tells us that history suggests a strong week ahead for small caps. But nothing is more important than the combination of price and volume. Before we grow overly excited about IWM's prospects, we need to clear candle body price resistance, currently at 208.21.
Major Index and Sector Rotation
With this new information (basically the same as the old), and with inflation fears subsiding further, where did the money go from Wednesday 2pm ET through Friday's close? Shouldn't we be interested in what the big Wall Street firms were doing with their money after this fundamental announcement? Well, this is what the big boys were favoring after the announcement.
Major Indices
NASDAQ 100 (QQQ): +1.74%
Russell 2000 (IWM): +1.73%
S&P 400 Mid Cap (MDY): +1.55%
S&P 500 Large Cap (SPY): +1.11%
Dow Jones (DIA): +0.92%
Sectors
Industrials (XLI): +1.49%
Communication Services (XLC): +1.46%
Technology (XLK): +1.34%
Consumer Discretionary (XLY): +0.84%
Energy (XLE): +0.74%
Financials (XLF): +0.73%
Health Care (XLV): +0.48%
Materials (XLB): +0.42%
Real Estate (XLRE): +0.16%
Utilities (XLU): +0.05%
Consumer Staples: -0.08%
Clearly, money rotated and benefited "risk on" areas of the stock market, which is secular bull market behavior. Aggressive sectors led by a wide margin over defensive sectors. Money also returned to growth as most growth vs. value ratios turned higher after Wednesday 2pm ET as well.
Industry Group Rotation
We now know that money rotated in bullish fashion and to more growth-oriented areas, though industrials' leadership and the S&P 500's break to yet another all-time high after the Fed announcement is further evidence of wide participation in this latest advance. And with small caps right up there with the NASDAQ 100, all those breadth arguments can be tossed right out of the window.
Here's what we should take away from industry group performance after the Fed meeting:
Semiconductors ($DJUSSC) was #1 among ALL industry groups - not too shocking
The Top 10 industry group performers belonged to either technology (XLK), consumer discretionary (XLY), or industrials (XLI)
Heavy construction ($DJUSHV) had broken out a few weeks ago and the Fed announcement saw momentum increase significantly within this group
Trucking ($DJUSTK) bounced off 50-day SMA support and is poised to break further into all-time high territory, a very bullish development for transportation stocks ($TRAN) in general
Gold mining ($DJUSPM) and mining ($DJUSMG) both saw bullish initial reactions, but then gave back most of those gains by Friday
Big Loser
In my mind, it's once again gold ($GOLD). I think many traders believed that falling rates ahead would trigger a drop in the U.S. Dollar (UUP). Not gonna happen. Any weakness in the dollar of late has been triggered by potential erosion by inflation. The Fed essentially said that inflation isn't a problem, despite the higher CPI and PPI readings recently. Our economy remains quite resilient and unemployment remains low, especially compared to foreign economies. That's why the UUP is strong. Another breakout in the UUP could be at hand:"
https://d.stockcharts.com/img/articles/2024/03/24/a71d54cc-fda9-432d-bb75-aada46fa19c1.jpg
"I know many keep pointing to the recent breakout in GLD, but I want to OUTPERFORM the S&P 500 and the above chart shows you that, outside of a few short-term pops to the upside (blue-dotted directional lines), the overall RELATIVE performance line is going down, down, down in a very big way. No thank you.
A Rapidly-Improving Heavy Construction Small Cap Stock
I was focusing on the heavy construction area ($DJUSHV) this weekend, because of its recent strength and then the surge after last Wednesday's Fed meeting and policy statement. There are a number of stocks that caught my attention, but one in particular that I believe has a LOT more upside given its current technical outlook. I'll be sending it out to our FREE EB Digest subscriber community before the market opens tomorrow morning. If you're not already a subscriber, you can CLICK HERE to sign up with your name and email address. There is no credit card required and you may unsubscribe at any time!"
Happy trading!
Tom
Stocks Are Going UP "With or Without You"
MARCH 23, 2024 AT 02:53 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/03/stocks-are-going-up-with-or-wi-122.html
"U2 is one of my favorite bands and I can't help but think of their song, "With or Without You", when I look at an S&P 500 chart. This secular bull market is waiting for no one. You're either in it or you're not. There's nothing wrong with being a bit cautious from time to time, but remaining on the bearish side of the ledger or, worse yet, shorting stocks? In my opinion, it's financial suicide. As money rotates into value-oriented stocks, there are fewer and fewer names not participating in this bull market. Trying to find stocks that will go down seems insane to me when the overwhelming majority keep trucking higher.
What Should We Expect From The Economy?
If you look at economically-sensitive areas, I find most charts very encouraging, starting with home construction ($DJUSHB). The DJUSHB was our best-performing industry group last week. Check out its performance both short-term and long-term:"
DJUSHB - daily
http://d.stockcharts.com/img/articles/2024/03/23/48de9150-92d5-40b1-962f-d1658546d65d.jpg
"Since breaking out in late-November, the DJUSHB has been very strong on both an absolute and relative basis (blue directional lines). But check out those blue circles in late-December. That was when the 10-year treasury yield ($TNX) hit its lowest level just beneath 3.80%. We saw the TNX climb 57 basis points after that and it's STILL 44 basis points higher. Yet the DJUSHB has been pushing higher on an absolute and relative basis with a much higher TNX. That tells me that the big Wall Street firms believe rates will be heading lower later in 2024 and into 2025."
DJUSHB - weekly
http://d.stockcharts.com/img/articles/2024/03/23/a044b938-6caa-4ddd-839c-616748a52837.jpg
"The massive move to the upside, again both on an absolute and relative basis, screams to me that the direction of annual INFLATION had more to do with DJUSHB performance than the direction of the TNX. Once the annual Core CPI rate printed that double top and rolled over, Wall Street could not have cared less about what the Fed (or CNBC) was saying. Lower inflation meant a MUCH BETTER environment for interest-rate sensitive areas.
If we look at transportation stocks ($TRAN), it wasn't quite so clear. Trucking ($DJUSTK) was very similar to home construction, mostly rising recently, but it's been a more difficult ride on the railroads ($DJUSRR). Check out these two 10-year weekly charts:"
Trucking ($DJUSTK)
http://d.stockcharts.com/img/articles/2024/03/23/34214006-1346-4d2e-a685-5a1db04ff37e.jpg
Railroads ($DJUSRR)
http://d.stockcharts.com/img/articles/2024/03/23/c7809f74-4365-4357-8d70-04d945da3804.jpg
"Trucking is bullish and helping to lead stock prices higher. Railroads? Not so much. It's worthwhile noting, however, that railroads appear to be printing the right side of a bullish cup with handle continuation pattern. What we need to see from this group is an ultimate breakout of this pattern above 3800 and a turn higher in the relative strength panel, clearing the 0.72 relative resistance level.
The Usual Suspects
Semiconductors ($DJUSSC), software ($DJUSSW), and internet ($DJUSNS) stocks have provided steady market leadership since early 2023, but growth had fallen out of favor the past few weeks to a couple months, depending on which chart you look at. The internet group, though, rallied to a make a breakout to an all-time high, despite the fact that its relative strength line isn't also at an all-time high:"
http://d.stockcharts.com/img/articles/2024/03/23/e7f3aa8d-01d2-4ae3-8792-bd2ce6cfbc48.jpg
"Weekly Market Recap
Key signals are telling me to ride this bull higher! I discuss a few of those signals and more than a dozen individual stocks showing tremendous strength in this week's episode of EB Weekly Market Recap. CLICK HERE to watch the video and please leave me comments. It'll also help me if you could hit that "Like" button and subscribe to our channel in order to be notified when I post a video."
Thanks so much!
Happy trading!
Tom
"...we'll try to sort fly dung from pepper..."
http://www.pretzelcharts.com/
"This market remains less fun than a rabies vaccination, with less clarity than a speech by Joe Biden."
The 60 min 10EMA target has been hit...Signal from yesterday.
https://schrts.co/dDsrEzXs
Thanks RCKS...One GURU i read is looking at possibly 5325 ish as a top?? The way it is going that may not even be a slow spot::)
"Wednesday's rally was not a terribly unexpected outcome, though its ferocity may have seemed (or been) a bit overboard."
http://www.pretzelcharts.com/
On Wednesday, the market rallied like crazy after the Fed announced that it was going to cut interest rates by (to quote Fed Chairman Jape Owl) "over 9000." In light of this shocking news, a blistering rally was the only logical response, since a rate cut of that magnitude would, of course, cure cancer, end death, and lead to the Earth maintaining a constant year-round temperature of 72-degrees. All of which would be good news for a pseudo-wartime economy that's increasingly driven by ever-expanding public and private debt. Though, to me, it seems a never-changing climate would negatively impact the government's rhetoric war against the natural climate and the public debt/"boosts to GDP" (wink wink) incurred in the name of "saving the planet by eliminating plant food (CO2)!" but the market took it as good news anyway.
And who are we to argue with the market? When a rate cut over 9000 comes along, it can only be good news. Hang on a second, I've just been handed a note from my editor...
Er, according to this note, the Fed didn't cut rates at all! I apologize for the error and wou...
NOTICE: In accordance with 1984 US Code § 2fu,
THIS BLOG HAS BEEN SUSPENDED
BY THE U.S. MINISTRY OF TRUTH
FOR SPREADING DISINFORMATION
Ha ha! Just kidding, of course! I think! Felt like engaging in a little "this-is-the-actual-direction-America-is-headed" humor while we still can!
Anyway, the Fed kept rates steady, making last update's commentary ("No matter what the Fed does, even if what it 'does' is nothing at all, the market typically reacts like this is earth-shattering news that has either appalled or amazed everyone on the planet.") interesting in hindsight.
Last update also noted that we were "still in 'nothing particularly bearish has happened yet' territory" and that "given the sideways nature of the near-term market and the fact that the larger trend is still 'up,' the onus remains on bears to get something going." So, Wednesday's rally was not a terribly unexpected outcome, though its ferocity may have seemed (or been) a bit overboard.
Chart-wise, BKX finally reached its months-old upside target:"
"And for SPX, it appears the prior sideways grind was probably a fourth wave triangle, which in turn implies the current rally is a fifth wave (degree unclear), so bears might get at least a little relief in the not-too-distant future. Worth a mention that it almost reached the conventional triangle target already, and one more high would hit it... but this market is so gonzo that it's tough to say what it will do (other than continue the trend) unless/until we see an impulsive turn."
"That's about it for today. Trade safe, and don't let the Fed bugs bite."
"Chart-wise, we're still in "nothing particularly bearish has happened yet" territory."
http://www.pretzelcharts.com/
"Today, the Fed will emerge from its bunker to announce what it's going to do about interest rates. A fair number of people seem to be expecting the Fed to start lowering rates "any minute now!" (the same people have been expecting that for roughly a year now) but that still seems premature to me. I suppose we'll see.
No matter what the Fed does, even if what it "does" is nothing at all, the market typically reacts like this is earth-shattering news that has either appalled or amazed everyone on the planet. As a result, Fed days can be both treacherous and fun to trade -- and sometimes outright hilarious, as they reveal the irrational nature of humanity and its construct known as "the market."
Chart-wise, we're still in "nothing particularly bearish has happened yet" territory. In fact, nothing at all has really happened, other than a sidewise grind."
"In conclusion, given the sideways nature of the near-term market and the fact that the larger trend is still "up," the onus remains on bears to get something going. Since today is a Fed day, there is, of course, always the chance that today becomes their opportunity. Trade safe."
The Market is still believing that the Fed will cut rates 3 times this year and I think the Fed is about to disappoint the Market. I say this partly due to this being a Presidential election year in that I believe they will try to stay out of the way until after the election is over for the most part.
If I'm correct about their likely path, there could be one cut this summer but that would be it until after the election and that would give us 2 cuts this year and not 3. One cut in June and one cut in Dec.
I think we are about to get a pause in the Market but I kind of doubt its a big sell off, more likely we will trade sideways into the June Fed Meeting.
Ignore The Naysayers, This Market Is On FIRE!!!
MARCH 17, 2024 AT 04:03 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
http://stockcharts.com/articles/tradingplaces/2024/03/ignore-the-naysayers-this-mark-486.html
"Happy St. Patrick's Day!
Last week was interesting for sure. Both February Core CPI (consumer price index) and February Core PPI (producer price index) came in above expectations. The headline PPI number doubled expectations. Despite that, the S&P 500 managed to close at an all-time high on Tuesday, the day the February CPI data was released.
This bull market remains extremely resilient and provides evidence of it nearly every day.
The vast majority of market analysts, in my opinion, expected that any weakness in the Magnificent 7 stocks would automatically be the end of this bull market. But they were wrong. NVIDIA Corp (NVDA) is the only stock in the Magnificent 7 that has gained any significant ground over the past month. The weakening price action for growth stocks is typical during the 2nd half of calendar quarters (except for Q4). Growth stocks tend to take a back seat to value, especially compared to what happens during the 1st half of calendar quarters as we work our way through earnings season.
Let's look at the Magnificent 7 stocks to gain a better feel of what's been transpiring there:"
http://d.stockcharts.com/img/articles/2024/03/17/b956b2cf-9211-4cd3-8310-7075e6b230fa.jpg
"For each stock, the pink line represents price action, while the black line represents the 10-day rate of change (ROC). Over the past couple weeks, there's been price deterioration in a few of these names, and especially on Tesla (TSLA), which has dropped a staggering 19% over this period.
The good news, however, is that during this more "risk off" kind of market, money is not leaving the stock market. Instead, it's helping to fuel a HUGE rally in other areas of the stock market, mostly value-oriented areas. This represents widening participation in this secular bull market advance, a key ingredient of bull market sustainability."
Earlier today, I created what could become a regular YouTube weekend video, "EB Weekly Market Recap" (see below). If you listen to it, please provide some feedback - either directly to us at "support@earningsbeats.com" or below the YouTube video in the comments section. Thanks!
EB Weekly Market Recap Video
Happy trading!
Tom
Thanks RCKS..Not sure what the FED will add to the mix this week but right now looking like they like it whatever it is..I probably have the least amount of knowledge what the FED is thinking right now. But from a rational thought, how can they lower rates while inflation continues to be going up. Guess that is why they pay them big bucks.
GREAT News: This Bull Market is Expanding!
MARCH 16, 2024 AT 02:04 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
http://stockcharts.com/articles/tradingplaces/2024/03/great-news-this-bull-market-is-321.html
"We have seen just about everything we've needed to see to confirm this powerful secular bull market advance since the beginning of 2023. There was really only one thing missing and it's not missing any longer. I'll get to that in a minute.
But let's look at the most aggressive sector in the stock market and let's evaluate the growth vs. value trade that has characterized and driven a tremendous move higher in U.S. equities.
Technology (XLK):
Semiconductors ($DJUSSC) have been the lifeblood of technology's leadership and technology represents nearly 30% of the S&P 500 now - thanks in large part to the huge advance in technology shares. After a remarkable 200% advance in semiconductors over 15 months, we've seen the DJUSSC cool off a bit, which began with the bearish engulfing candle I pointed out one week ago:"
http://d.stockcharts.com/img/articles/2024/03/16/ba02fa28-72fd-4448-b918-8515136bb8ff.jpg
"From the high on Friday, March 8th to the low on Friday, March 15th, the DJUSSC lost approximately 10%. That had an obvious impact on technology stocks in general, which lagged most sectors last week.
The very ugly bearish engulfing candle, together with the HUGE volume, is not to be ignored. It "could" represent a major top in this group for awhile, which isn't a bad thing. We shouldn't expect the DJUSSC to triple every 15 months, that's not sustainable. But if it pauses in the near-term, it's likely to have a significant effect as many of its component stocks are represented in both the S&P 500 ($SPX) and the NASDAQ 100 ($NDX). The group is much more heavily represented in the $NDX. Semiconductors represents nearly 22.86% and 9.76% of the $NDX and $SPX, respectively. While there's plenty of growth stocks in the S&P 500, the NASDAQ 100 is much more heavily impacted by growth stocks. That's why I like to follow the $NDX:$SPX ratio. It's a "growth vs. value" ratio that provides us one look at the risk environment that we're in. When the ratio goes up, we can typically conclude that the market environment is "risk on", which usually leads to higher stock prices. A falling ratio, however, can signal "risk off", which would mean more caution. Here's where we currently stand:"
http://d.stockcharts.com/img/articles/2024/03/16/104551ac-a64b-4f3e-8987-4ca3a5d65248.jpg
"During the summer of 2023, the $NDX:$SPX ratio declined and this "risk off" signal resulted in a 10% correction as the benchmark S&P 500 followed suit to the downside. But look at the last 3 "risk off" readings in the $NDX:$SPX ratio. The S&P 500, for the most part, has kept gaining ground, especially over the past two months. What's changed?
Well, thanks for asking, because this was the missing ingredient in the secular bull market in 2024. Let me show you what's changed. It's called BULLISH ROTATION:"
XLI:$SPX
'
http://d.stockcharts.com/img/articles/2024/03/16/be861132-993a-4ee9-a06d-708885085a97.jpg
XLF:$SPX
http://d.stockcharts.com/img/articles/2024/03/16/2e85d812-a2bc-4726-a38e-584399542e7a.jpg
XLE:$SPX
http://d.stockcharts.com/img/articles/2024/03/16/03992b1e-8f3f-4439-91df-c0bb2a5be061.jpg
XLB:$SPX
http://d.stockcharts.com/img/articles/2024/03/16/d0efe879-0602-421c-b0eb-8673c4909164.jpg
"Over the summer months, when we turned "risk off", the proceeds from selling those aggressive sectors simply left the market, it didn't rotate to and create bullishness in other sectors in the market. You can see that by simply following all of those red directional lines for each of the 4 sectors shown above. This time is different and the above relative sector charts help us visualize the difference.
I believe technology will be fine in time, but a period of underperformance wouldn't be a bad thing at all. In fact, the rotation is creating tremendous opportunities in other areas of the market. You need to recognize this shift now, because it's increasing the likelihood that our current bull market run may only just be beginning.
In Monday morning's FREE EB Digest newsletter article, I'll be featuring a company (outside the technology sector) that recently broke out and looks poised for significantly higher price down the road as money has been pouring into its sector. You can CLICK HERE to sign up for this FREE newsletter with your name and email address. There's no credit card required and you may unsubscribe at any time."
Take advantage of this rotation!
Happy trading!
Tom
".........today will probably determine if bears are going to do anything with the situation:"
http://www.pretzelcharts.com/
"On Friday, bears finally managed to get below the blue trend line, but as I wrote in the last update:
at this point, it's not impossible for the market to drift sideways through it without doing much technical damage, which is why I (today) added 5119 as relevant; probably even more relevant than blue now. Though even 5119 isn't unrecoverable for bulls, sustained trade beneath it would at least be a "start" for bears.
Thus, today will probably determine if bears are going to do anything with the situation:"
"Really, not a lot to say beyond that and everything I've said over the past weeks -- for now. Trade safe."
5119 is the Bear Target
http://www.pretzelcharts.com/
"Since last update, SPX again tested the previously noted blue support line, and it again held:"
"On March 11, I called out the blue line as the first zone bears would need in order to start turning things a bit more in their favor, and the market has since shown the value of that line -- however, at this point, it's not impossible for the market to drift sideways through it without doing much technical damage, which is why I (today) added 5119 as relevant; probably even more relevant than blue now. Though even 5119 isn't unrecoverable for bulls, sustained trade beneath it would at least be a "start" for bears. Trade safe."
Resistance ahead at 5190, maybe?
http://www.pretzelcharts.com/
"Not much to add market-wise since Monday's update, so I've just added a few comments to the short-term SPX chart:"
"The next version steps out one degree to examine the trend lines at the next larger time frame:"
"Not much to say beyond that today. Trade safe."
Weekly Stock Market Commentary 3/8/2024
By Lawrence G. McMillan
"This market just keeps rolling along. It is overbought, but that's probably a good thing rather than a bad thing. As the noted Smith Barney technician, the late Alan Shaw, said "The most bullish thing a market can do is get overbought and stay there." That's what this market is doing.
Even though $SPX has continued to make new all-time highs (16 times since the first one on January 19th), it shows no real signs of slowing down. There were some minor days of selling recently, and four times $SPX made an intraday low near 5050, so that is a verified support level now. There are various other support levels below that mostly at the weekly lows when there some one-day selloffs (denoted by horizontal red lines on the chart in Figure 1) and then the major support is at 4800. There is also a gap on the chart, down to 4983 (circled on the chart), and filling that gap would potentially be constructive as well. For one day this week, there was a gap on the upside, but that was quickly filled the next day.
Equity-only put-call ratios continue to hover near the lows of their charts. The standard ratio (Figure 2) made another new relative low this week, while the weighted ratio (Figure 3), fell to the lowest levels since November 2021. Over the past couple of days, the weighted ratio has risen ever so slightly. The computer analysis programs are "saying" that these are on or about to be on sell signals, but that is only because they are so low. But we would not consider these charts to be bearish for stocks until the ratios begin to rise steadily from these lows.
Breadth has been back and forth, but the breadth oscillators have managed to cling to buy signals.
$VIX is languishing back near its lows as well. The "spike peak" buy signal is still in place. Meanwhile, the trend of $VIX remains bullish for stocks because both $VIX and its 20- day Moving Average are below the 200-day Moving Average.
In summary, we are maintaining our "core" bullish position in line with the positive $SPX chart. We will trade other confirmed signals around that. There are no sell signals in place now."
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1710196137957
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1710196137957
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1710196137957
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1710196137957
"Now, using politician logic, I'm going to go conduct an experiment to find out if pouring more water in a clogged sink will finally stop it from overflowing."
http://www.pretzelcharts.com/
"I normally don't comment on the proposals of politicians, but this is relevant to the market, particularly as it relates to the Fed and to inflation.
In his State of the Onion (a million years ago, when my little sister was just learning to read, we were in the car one day and she was trying to read every business sign we drove past. We passed "Union Bank" and she dutifully recited, in her monotone, "Onion Bank" -- and my parents and I laughed. But, unbeknownst to me at the time, my sister had unwittingly doomed me to constantly call union "onion" for the next 40 years and counting.) Address (yes, we're still in the same sentence here!), Biden proposed that "instead of waiting for inflation to come down," he wants to give away a bunch of money to homeowners and wannabe homeowners (i.e.- presumably to everyone) immediately.
Most of us who didn't flunk Econ understand that flooding the money supply with more dollars is the exact thing that causes inflation in the first place (see: Covid stimulus, Fed printing, etc.). Printing more money without a corresponding increase in production doesn't create wealth for the same reason that printing more first edition Superman comics would drive the value of each comic down: The more abundant a resource is -- be it comics, gemstones, or cash dollars -- the less each unit of that resource is worth. For this reason, printing money only makes existing dollars worth less (new money, without production, has no choice but to steal a portion of its value from existing money, which is the one and only reason newly-printed money has any value at all). We experience this at the ground level as goods and services costing more -- aka: inflation. But really, goods and services haven't gone up, the value of our cash has instead gone down, so it takes more dollars to buy everything.
Anyway, this proposal, were it to pass, is a sure-fire way to create more inflation. Hence today's title. To frame "more free money" as some sort of solution to inflation is akin to suggesting that more water is a solution to drowning. So, it may be relevant to keep an eye on whether this proposal gains steam or not, because if it does, it will likely force the Fed to keep rates higher for longer.
Market-wise, we had a down day on Friday, coincident with COMPQ hitting next resistance -- but bears still have work to do to make it more than that:
COMPQ first:"
"SPX, which discusses what bears would need to do next:"
"And, just because it's out there, a little discussion on some bigger-picture bull and bear options:"
"That's it for today. Now, using politician logic, I'm going to go conduct an experiment to find out if pouring more water in a clogged sink will finally stop it from overflowing. Trade safe."
Tom Bowley is seeing the Bearish Engulfing candle and suggests the Semiconductors need to take a rest, he's using the DJUSSC as his chart for the Semi's.
He suggests that the Rally in the S&P 500 still has legs to go higher even if the NVDA's and the SMCI's need to digest these crazy gains they have had.
Yes I'm having fun and seeing a part of the world I had never been to before, SE Asia, about to get at the end of the this week. A trip like this wears me out but it's been great at the same time. I wish I were 20-30 years younger, that would make it easier....hahaha
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174012951
You Need To Realize ONE Important Fact With Big Rallies Like This One
Tom Bowley
Chief Market Strategist, EarningsBeats.com
http://stockcharts.com/articles/tradingplaces/2024/03/you-need-to-realize-one-import-352.html
"Make absolutely no mistake about it, Friday was the most bearish day of 2024. There was a bearish engulfing candle on MASSIVE volume in the semiconductors area ($DJUSSC), and this group has been BY FAR the biggest single reason why our major indices have advanced as much as they have. Check out this chart:"
http://d.stockcharts.com/img/articles/2024/03/08/bea6abcd-7626-4df5-b021-b29aafe8760d.jpg
"That's a NASTY bearish engulfing candle on the semiconductor chart. And the reversal occurred on the second largest volume of the past 6 months. I believe today's open marked a very significant top on the DJUSSC. That doesn't mean the overall market rally has ended. But I do expect to see other areas of the market lead the next advance. At a minimum, I'd expect at least short-term consolidation or selling among semiconductor stocks. That's not a bad thing, it's a necessary thing. Continuing higher in parabolic fashion would only end in a much more substantial pullback.
But huge rallies do not always end in despair. In fact, most just keep on truckin'!
Let's check to see how the rally off the October 27th low measures up against other periods over the past few decades, first on the S&P 500 and then on the semiconductors index ($DJUSSC):"
http://d.stockcharts.com/img/articles/2024/03/08/aa1974f4-0057-41d1-a811-7d698a9a728e.jpg
"The blue-dotted vertical lines coincide with every 90-day period in which the S&P 500 gains 25% or more. Prior to the current 25% gain in 90 days, you can see that it's only been achieved a handful of other times over the past 30 years. The black arrows tell you that every one of these 25% rallies occurred AFTER a significant bear market bottom or correction low. This is the importance of calling major market bottoms, because the biggest gains take place on the heels of these bottoms.
Next, check out what happens to the S&P 500 after these 25%+ gains are made. It keeps going higher! We are in a secular bull market. If you have been waiting to get into this rally, I'd consider using any short-term weakness to do so. That's my opinion, of course. I'm not a Registered Investment Advisor and, therefore, am not licensed to provide recommendations. I'm simply providing educational materials based on my research. Do with it what you will."
http://d.stockcharts.com/img/articles/2024/03/08/c6e4a093-0599-4f52-b98c-3fe44c7964a3.jpg
"Here, the blue-dotted vertical lines coincide with 90-day periods where the DJUSSC gains at least 50%. Again, this has only happened a handful of times. Right now, the last 90 days has resulted in a gain in the DJUSSC of more than 75%, which eclipses any other semiconductor rally over the past 30 years. The group needs a break.
Should semiconductors stall here, I'm still very encouraged by the small cap asset class. On Monday, I'll be analyzing a tiny software company that this week broke out of a cup with handle pattern on crazy high volume. It potentially could gain 40-50% over the next few months to its pattern measurement. To check it out, you can CLICK HERE to subscribe to our FREE EB Digest newsletter with only your name and email address. I'll send you this tiny software stock on Monday morning."
Happy trading!
Tom
Thanks RCKS..Are you on a business or pleasure trip. Sounds like you are seeing a lot of interesting country...How about this for Bearish engulfing???
https://schrts.co/arKiYkAG
"We contend: The trend that's your friend may extend and append, so don't condescend lest your bowels distend."
http://www.pretzelcharts.com/
On February 26, I wrote:
"[T]o my way of thinking -- at least for the time being -- it's just a matter of following the trend until we get another impulsive decline to signal a possible short-term (or longer term, if it's a larger impulse) trend change.
And there's been no change to my stance. So there really hasn't been a whole lot to say (since I don't like to repeat myself too often) in the weeks since.
Last update noted that SPX had finally formed an impulsive decline, but also that there were reasonable odds it was just the C-wave of an expanded flat, and hence the end of a correction and not the start of one. The indicator that bears would have needed (in order to tilt the field their way) was a break below Tuesday's low, but that never came:"
"Beyond that, not much more to add, still... for now. Trending markets can be a bit boring. As the old saying goes, "We contend: The trend that's your friend may extend and append, so don't condescend lest your bowels distend." Or something like that. Trade safe."
"Bigger picture, INDU continues to suggest that bulls will maintain control at the larger time scales for the time being:"
http://www.pretzelcharts.com/
"(Warning!) Random thought/rant: Yesterday I was watching a show and heard the expression "your truth" -- and it occurred to me that this expression is essentially an oxymoron. "Your" implies subjective possession, but "truth" transcends subjectivity and exists independent of you and me. Thus, the truth cannot be predicated with "your." Either something is true or it isn't, regardless of whether we believe it or not -- we don't own the truth even if we manage to align our personal beliefs with it. And it continues to exist for anyone to discover, even after we're 6 feet under. Thus, there simply is no such thing as "your" truth or "my" truth.
Instead of "your truth," we used to say "your opinion," which is the proper way to express the underlying reality. This may seem nitpicky, but clear language allows us to think (both individually and as a group) with accuracy. Further, two incorrect beliefs are smuggled into the conversation, and into our thoughts, with the expression "your truth":
Whatever I believe is elevated to being reality, regardless of whether it aligns with reality or not.
Objective truth doesn't exist (the word "truth" is being quietly redefined to mean "opinion," which means (if we accept that, tacitly or otherwise) all truth is just, like, your opinion, man.). "
"Anyway, I'm against destroying the language, because it destroys our ability to communicate, which in turn destroys our ability to think and act collectively. Which can only lead to society moving backwards.
Rant over.
Yesterday, the market dropped for a minute or two, but it's unclear if that means anything, even for the near term:"
"Bigger picture, INDU continues to suggest that bulls will maintain control at the larger time scales for the time being:"
"COMPQ is near a zone that could act as resistance for a time:"
"That's about it for today. Trade safe."
Bubbleishes. Target: For Bitcoin it is 80,547. I expect it would hit soon enough and then we see if we are finally at the Tulip Mania implosion or not. The Bond yields, all, should rise about 80% more from where it is before that too finds a terminal point. The mass consensus for years was this rate spike would plunge us into a deep recession, but it has NOT! Like the early 70's inflation was DEAD! I expect DEBT, a word not spoken for decades to be front and center when this whole mess implodes.
The new paradigm. In politics moral code and economic expansion. A "perfect" trifecta.
Now that the Stupreme Court took so long just to announce they plan on hearing the immunity case with another 7 weeks just to start the hearings it assures the crowning of a despot. Our fate is known and anyone daring to evaluate the facts would come to the same conclusion. The odds of our physical being staying intact over next few years get slimmer every day. Combine "Being There" a light Parady on our ability to pick leaders that give us what we want to hear and "Dr. Strangelove" an insane world with paranoia and self-destructive nature. A powerful combination. This antichrist has evangelic foaming at the mount with his pussy magnetism and rape conviction. Impeachment, extortion, sedition, treason are only vaguely understood words that have no meaning for Trump himself.
Even the Stupreme Court has granted trump his dictatorial powers. He is an odds-on favorite to win, and his powers would be magnified 100-fold once in office. Like the great minds all united in concluding a Pandemic was a mild nuisance for 5 weeks into the spread till ONE person died on our soil.
"....never short a dull market," and that proved to be valid wisdom for Friday."
http://www.pretzelcharts.com/
"Last update gave a nod to the old adage: "never short a dull market," and that proved to be valid wisdom for Friday. Today could see the market correct some of those gains, but again, there's just not much more to be drawn from the near-term at the moment. I'd rather let the market lead than try to force my own biases onto the charts and "see what I want to see," so I'm continuing to take it as it comes until a pattern reveals itself in a more concretized fashion."
"As I've covered all the bases and hit all the beats at various time frames over the past week or two, there's not much to add beyond that, for now. Trade safe."
"There's really nothing to add to the past few updates:"
http://www.pretzelcharts.com/
"We can see on the chart above that SPX is in the zone of retesting the all-time high, so while there's nothing in the pattern to indicate much one way or the other, classic technical analysis says that prior highs have the potential to act as resistance, so if bears are going to do anything, then now's the time. I don't have much of a lean one way or the other at the moment for the near-term. Intermediate term, I've already discussed the hurdles bears face, so nothing new on that front. Trade safe."
"...........If it does continue lower directly, then a gap fill down toward 4980-90 would not be out of the question........."
http://www.pretzelcharts.com/
"Now, the halftime air was sweet perfume
While sergeants played a marching tune
We all got up to dance
Oh, but we never got the chance
'Cause the players tried to take the field
The marching band refused to yield
Do you recall what was revealed
The day the music died
-- American Pie, Don McLean
For anyone who's unaware: The "sergeants/marching band" represent the military industrial complex. The players are us. And, as we all know, once they had it, the "marching band refused to yield" control back to the people. That portion of the song is about the loss of the American republic to the interests that still control it. For some reason, it felt apropos to mention today. Make of that what you will.
Looking at SPX intermediate term, we can see the zone bears will need to claim to put the bigger brakes on things. If bears cannot claim and hold that zone, then we could be a ways away from any meaningful tops."
"Near-term, further correction from here is possible, but not guaranteed."
"If we put those two charts together, then we see that bears would need to create a larger correction here that then whipsaws the breakout on the first chart -- if they want to get something going for more than the short-term, that is. If it does continue lower directly, then a gap fill down toward 4980-90 would not be out of the question. If that happens, then we'll take it from there. Given the significant number of x-factors in the overall picture, I'm content to let the market lead for now. Trade safe."
CyclesFan
SPX update
$SPX - After hitting the 2.0 extension at 5110 on Friday we had a down day today. At the moment it isn't clear if the end of February is going to be a high or a low. Last week's gap is from 4983 to 5039. If SPX trades below 5039 this week it's likely to decline into Thursday. pic.twitter.com/rpwe3AxwyR
— CyclesFan (@CyclesFan) February 26, 2024
Two Charts = the Market a Nutshell
http://www.pretzelcharts.com/
"Let's just look at two charts today, because these two charts sum up the overall situation.
First is a chart we've looked at recently:"
"On the chart above, INDU could run higher and still be in the diagonal -- the rule in an ending diagonal is that the length of wave (iii) cannot exceed the length of wave (v), and INDU is nowhere near violating that rule yet. You'll notice I did not specify "contracting" ending diagonal -- I did this because after ~25 years of charting with Elliott Wave, I'm still not convinced that "expanding" diagonals actually exist. I think one can usually find another explanation when one is tempted to employ an expanding diagonal.
So, much as I do not recognize Disney's abomination of a trilogy as actual "Star Wars," I do not recognize "expanding diagonals" as legitimate patterns.
Next up is a closer view of INDU, which I began calling attention to in early January, as this chart summarizes the issue:"
"In conclusion, this market long ago detached from fundamental reality, so to my way of thinking -- at least for the time being -- it's just a matter of following the trend until we get another impulsive decline to signal a possible short-term (or longer term, if it's a larger impulse) trend change. If one looks back to last update, one can see it is possible that SPX is getting close to wrapping up a smaller fifth wave, so a correction this week is not out of the question -- just not willing to front run it from an analytical perspective, since it's an ambiguous pattern. Trade safe."
This reminds pretzel of... "The tail end of the dot.com bubble, when "irrational exuberance" ruled the day."
http://www.pretzelcharts.com/
"Since last update, COMPQ captured its target, but SPX fell short. Markets are rarely rational, and I learned to accept that decades ago as a trader -- but I have to say, this particular market is a frustratingly irrational market. The fundamental macroeconomic picture is vastly different than the late 1990s, but as far as the market's behavior if judged as if in a vacuum, in a weird way, I might be tempted to say that's the closest analog I can find in my own personal experience. The tail end of the dot.com bubble, when "irrational exuberance" ruled the day.
One huge difference in the macroeconomic picture is, of course, the massive debt facing both the U.S. and the world... and being overburdened by debt rarely ends well. WSJ has had some interesting coverage of this lately, reporting that interest payments alone over the next 10 years are projected to exceed $12 trillion dollars. This year, servicing the debt (interest alone) is already going to be third largest expenditure, behind only Social Security and Medicare:"
"Interest payments have exceeded the national defense budget for the first time in history:"
"The current trajectory is simply unsustainable:"
But hey, that probably won't be an issue for a few more minutes, so BUY, MORTIMER, BUY!
"Anyway, here's COMPQ, which behaved well:"
"And SPX, which behaved like a crack addict:"
"In conclusion, the market clearly wanted a simple correction either way, so not much to add beyond all that. Trade safe."
".......the market has behaved as expected so far, though I'd like to see SPX capture its next targets as well."
http://www.pretzelcharts.com/
"Since last update, COMPQ confirmed its count and the (then presumed, but since confirmed) first impulse down:"
"SPX went the right direction, but has so far held above the low of the prior (presumed) impulse down:"
"INDU continues to show that bulls probably still have the long-term ball (for now), but bears do have two intermediate options that could generate large declines in the meantime:"
"Below is BKX, and again, this is not a "prediction," just a reminder to the most bearish possibility. The most bearish BKX option could pair with either of the intermediate bear options in INDU:"
"In conclusion, the market has behaved as expected so far, though I'd like to see SPX capture its next targets as well. Trade safe."
Stock Market Commentary 02/16/24
By Lawrence G. McMillan
"On Tuesday (February 13th), there was a negative CPI report, and the market fell sharply in two heavy waves of selling. But late in the day, buyers came in and they have been buying the market for the entire rest of the week. So, this seems very similar to the sharp, one-day selloff of late January. It eventually amounted to nothing.
$SPX closed at a new all-time high yesterday, $SPX has near-term support levels at 4920 and 4845 the lows of those two sharp, but short-lived selloffs. Below there, support in the 4680-4800 area should be more substantial. A close below 4680 would be something of a problem, for it would change the scope of the $SPX chart from bullish to bearish.
Equity-only put-call ratios have gotten more overbought and more bullish, as they are dropping rapidly now. The weighted ratio is at levels last seen in November 2021. The standard ratio isn't that low, but it is near the lows of the last year once again. When these ratios are at or near the bottom of their charts, they represent an overbought condition for the stock market, but they won't confirm sell signals until they begin to trend higher.
Breadth had been struggling, and the breadth oscillators were on sell signals as recently as a week and a day ago. But breadth has since then -- even with the "90% down day" on February 13th. Both breadth oscillators are now in modestly overbought territory having canceled out any recent sell signals. Frankly, I'd like to see the breadth oscillators a lot more overbought than this, what with $SPX making another new all-time high, but it is what it is.
Perhaps the one big difference between the previous sharp one- day selloff in $SPX in late January and the one this week was that $VIX jumped sharply higher this time. On February 13th, $VIX spiked up to 17.94 and closed at 15.85. That close was above the 200-day Moving Average, so the trend of $VIX buy signal was stopped out. But that spiking mode didn't last long, and by the very next day, $VIX had closed all the way back down at 14.38. Thus a new "spike peak" buy signal was generated.
In summary, we continue to maintain a "core" bullish position because of the positive nature of the $SPX chart. Moreover we will trade other confirmed signals around that "core.""
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1708112157638
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1708112157638
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1708112157638
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1708112157638
"Anyway, this is where bears wanted to be, and patient bears who waited for the suggested targets were rewarded with reasonable entries. No guarantees that the market doesn't pull something funky, since, frankly, nothing surprises me from this nutzoid market anymore, but it's as promising a near-term setup as bears have seen in months, so we'll see if they can do anything with it."
http://www.pretzelcharts.com/
"Last update's call for the 1/A low in SPX and COMPQ was good, and both have rallied up to their respective target zones. COMPQ ran right to its 2/B label:"
"SPX ran a hair past its zone:"
"Interestingly, futures are down pretty solidly right now, presumably on the breaking news that cOmPUter mODels suggest that the Atlantic Ocean will ultimately close, which will devastate the East Coast tourist dollar and the local economies that depend on it. Can't go to the beach if it's closed!"
"Also, inflation seems to be picking up again, so futures probably don't like that, either. Core PPI was up 0.50% vs. the estimated 0.1% that was projected by people who have all their shopping done by servants.
Anyway, this is where bears wanted to be, and patient bears who waited for the suggested targets were rewarded with reasonable entries. No guarantees that the market doesn't pull something funky, since, frankly, nothing surprises me from this nutzoid market anymore, but it's as promising a near-term setup as bears have seen in months, so we'll see if they can do anything with it. Trade safe."
CyclesFan
SPX Thursday evening take
$SPX - The 10 day low on Tuesday is confirmed now. After a 2 day rally it's only 17 points below Monday's high and it looks like a new high may be made tomorrow, before the market enters into the 2nd half of February which has been historically bearish. pic.twitter.com/RKrXu8Karn
— CyclesFan (@CyclesFan) February 15, 2024
Tom McClellan Twitter post
I'm of the belief that a Top is in or his close, at least an Intermediate one lasting most of this year if not all of it
Latest data from Cass Freight https://t.co/scv4rHvEPR shows that both shipments and expenditures are still shrinking. Not a good time to be making monthly payments on a Peterbilt. pic.twitter.com/0EBNSM2Bf5
— Tom McClellan (@McClellanOsc) February 15, 2024
Thanks Glen
I know we are not going down but I think we have a top. This week is Monthly Option Expiration and so I can see prices hold through tomorrow but I do expect selling next week. Obviously I could be totally wrong and we take off next week to Higher Highs but I don't think so.
For me the tell is AAPL and TRAN they both are showing weakness yesterday and today. I think they are the Canaries in the Coal Mine
http://stockcharts.com/c-sc/sc?s=AAPL&p=D&b=5&g=0&i=t0252600497c&a=1599493471&r=1708019195180
http://stockcharts.com/c-sc/sc?s=%24TRAN&p=D&b=5&g=0&i=p86657076289&a=259614102&r=1708019219498
RCKS Thanks.. My one guru says we need to stay below 5018 Futs which is 4994 on Cash. Could run to 5085 to 5090...
I have no real targets right now. So just waiting and watching.
" While it seems reasonable to think we'll get at least one more wave down, it's too early to say if that will then go on to develop into a still-larger impulsive decline, but we'll keep an eye out as it develops."
http://www.pretzelcharts.com/
"On Friday, my last real update (pre-illness generated fever, that is), I wrote:
Last update discussed that the market likely needed a few more highs before it could enter an inflection
zone, and if the gap up in futures sticks, we'll be getting into that zone today.
We then ended up making one more high on Monday (before reversing all of Monday's gains), but I can't call it much better than that. By all rights, the decline does appear to be impulsive, so any intrepid bears now have a zone to act against (north of the all-time high would suggest that impulsive decline was the c-wave of an expanded flat).
Note on the chart below, I sketched in 2/B as a gap fill, but as a corrective wave, 2/B can run higher or lower than that. Its only hard rule is that it can't break the red 5 high."
"COMPQ ended up dying right at the median channel line, just as I'd predicted a week ago:"
"Finally, INDU reminds us of the most bearish potential here, but again, this is "only" that at this stage; it's far too early to say if it will be this bearish or only be a short-lived correction:"
"In conclusion, while the INDU chart shows the most bearish potential and the (iii) target label, which was added back on January 8, was ~reached, please keep in mind that the correction could always just be a simple ABC as shown on the COMPQ chart. While it seems reasonable to think we'll get at least one more wave down, it's too early to say if that will then go on to develop into a still-larger impulsive decline, but we'll keep an eye out as it develops. Trade safe."
CyclesFan Update
SPX: We got the reaction to CPI
$SPX - Based on the frequency of short term cycle lows since December, the next 10 day low should occur on Wednesday. If the rhythm doesn't change this time, the market should have a negative reaction to the CPI tomorrow and if it's a down day it will confirm a decline into Wed. pic.twitter.com/pWS8j1uVMA
— CyclesFan (@CyclesFan) February 12, 2024
By Lawrence G. McMillan
There is a developing divergence between Cumulative Volume Breadth (CVB) and $SPX. That is, $SPX is making new all-time highs, but CVB is not. CVB is merely the running daily total of “advancing volume minus declining volume.”
There are two uses for CVB: one is a positive signal – when CVB makes a new all-time high before $SPX does. Then $SPX normally follows. However, there is a negative signal as well. When $SPX is making new all-time highs and CVB is lagging behind, that is a warning sign for the stock market. However, it is important to understand that this negative divergence can sometimes last for a long time – it is not an immediate sell signal.
"......I do want to remind bears that it's entirely possible for the market to blow through this first inflection zone, so (as I've said many times before), awaiting an impulsive decline is not a bad strategy."
http://www.pretzelcharts.com/
"Yesterday, I came down with the aptly named Martian Death Flu (okay, that name is made up; but it's NOT Covid, likely just a bad sinus infection) -- the first time I've had a head cold in like 5 or 6 years. Now, I'm not telling you this for sympathy, I'm telling you this because I've been running a fever on and off and have been generally feeling like I was run over by dump truck, so today's update is just going to be a couple of updated charts with nothing in the way of new commentary (I feel like giving market reads with a fever is probably irresponsible). I debated "calling in" today and not doing an update at all, but that's not really my style.
COMPQ has run farther into its target zone:"
"INDU still has a shot at this pattern -- but again, keep in mind it could be much more bullish than this, if this is a traditional third wave:"
"So, not much to add -- but I do want to remind bears that it's entirely possible for the market to blow through this first inflection zone, so (as I've said many times before), awaiting an impulsive decline is not a bad strategy. Trade safe."
".......last update's call for multiple new highs was good, but we may not know for several sessions yet whether bears can do anything with this inflection zone."
http://www.pretzelcharts.com/
"Last update discussed that the market likely needed a few more highs before it could enter an inflection zone, and if the gap up in futures sticks, we'll be getting into that zone today.
That said, keep in mind that this is not a "guaranteed" reversal zone, merely a potential inflection zone. The market reserves the right to tack on extended fifths and the like if it so chooses. For that reason, cautious bears may want to await an impulsive decline before getting too aggressive."
"SPX hit the "5" target zone (from Wednesday's update) in the overnight session, but has since fallen back a bit:"
"Finally, INDU is now very close to the (iii) label from January. This shows one option that could give bulls a headache, were it to play out:"
"In conclusion, last update's call for multiple new highs was good, but we may not know for several sessions yet whether bears can do anything with this inflection zone. Trade safe."
"Not Just Yet, But Maybe Soon"
http://www.pretzelcharts.com/
"Gonna let the charts do the talking today, starting with COMPQ, which has done a good job keeping us on the right side of the trade for the past few weeks:"
"SPX in a similar position:"
"As I mentioned a month ago, INDU continues to be the thorn in bears' side. The first chart discusses the most bullish option:"
"The two options that offer bears some relief would be (1) the diagonal shown below, or (2) a large b-wave high that revisits the 2022 lows before heading back up:"
"In conclusion, the market still appears to have higher to run over the near term, but will soon be getting into a near-term inflection zone. We'll see how it handles that. Trade safe."
Thanks RCKS.. I do not propose that I am a market guru at all. I try and see what both sides see but I do have a bearish tendency to my view of the market. I think Da Boyz can manipulate the markets and do at times. And now us small traders are competing with the AI systems around so we have almost zero chance of being right all that often. And if I make a reply that sounds like I disagree with you I do not mean to. But guess I am just stubborn and think I'm right sometime too. But I do try and find guru's who have winning records...If you can find them anymore..I now read a couple one is mostly a very short term guy..Like hours and the other guy has some kind of system that sems to work except he get in a little early . But I appreciate all your posts and read them all.
Why This Latest Bull Market Advance Is So Bullish
FEBRUARY 04, 2024 AT 01:16 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
http://stockcharts.com/articles/tradingplaces/2024/02/why-this-latest-bull-market-ad-997.html
"I've been bullish for nearly two years now. Bullish rotation and Wall Street manipulation started the latest leg of this SECULAR bull market back in June 2022. If you follow my research and work, then I'm sure you remember these two headlines on YouTube:"
http://d.stockcharts.com/img/articles/2024/02/04/f2293d4b-5b40-4c62-98ee-1e95bd1037d9.jpg
"You can see that these two calls were in mid-June 2022 and late-September 2022. They weren't the exact bottom, which occurred on October 13, 2022, but I'd say I was pretty darn close. And very few agreed with me at the time. That's okay though, because my research is most important to me when I see things differently from everyone else. History has proven me correct and that's what's most important to me.
The bears don't give in easily, however, as it's always in style to think bearish thoughts. Pessimism runs wild in humans. It's this pessimism that absolutely fuels bull markets.
Sentiment
Folks, the pessimism is just beginning to top and roll over. The 1-year (or 253-day) moving average of the equity-only put call ratio ($CPCE) has been unbelievably accurate in calling MAJOR bull market advances. It's been calling for one again and it's right again:"
http://d.stockcharts.com/img/articles/2024/02/04/664549b0-0bdd-43f2-8841-ff9f833e0459.jpg
"Sentiment plays a HUGE role in long-term stock market direction. The current secular bull market is likely safe for months, if not years, simply because the options world remains do pessimistic. Those same options traders were incredibly bullish at the end of 2021, just before our nasty 2022 cyclical bear market. Simply "put", there were no more buyers. Everyone that wanted in was already in!
I can see a 5-6% pullback at some point in 2024, possibly even a 10% correction over the summer, but I'm confident we'll end 2024 at all-time highs. The above CPCE chart is one big reason why.
Bullish Rotation
The bears have tried just about every excuse since mid 2022. Inflation and "Don't fight the Fed" were two of my favorites back then. Then the bears morphed into "rallies are too narrow", "breadth is weak", and, of course, "it's only the Magnificent 7!" Let me just say that the Magnificent 7 is the largest part of the SPY and QQQ, so if I could hand pick which 7 stocks I'd want to perform well, it would be those EXACT 7!
But I'd agree the best bull market is one in which we see wide participation. At EarningsBeats.com, we absolutely prefer seeing the rising tide lifting ALL boats. The rally since October 27th is the rising tide lifting ALL boats!
I've broken down the key S&P 500 rallies since the October 2022 cyclical bear market low. Check them out:"
http://d.stockcharts.com/img/articles/2024/02/04/9749ae7d-7b41-4521-9b24-43609f81edce.jpg
"The red-shading shows the narrow strength in our 3 key aggressive sectors - XLK, XLY, and XLC. The green-shaded area highlights the WIDE participation in the rally off the October 2023 low. The red-shaded rally had leadership from 4 of the 5 aggressive sectors. The only one missing was financials (XLF). The green-shaded rally, however, shows ALL 5 aggressive sectors leading AND several other sectors not far behind. That's the rising tide lifting ALL boats.
Top 20 Best Performers
Many of us (maybe all of us?) suffer from some form of recency bias. It's easy to look at last week's rally led by Meta Platform's (META) blowout quarterly earnings report and believe it's simply the Magnificent 7 doing their thing again. Last week was more than that, though. If we look at the stocks in the S&P 500 and NASDAQ 100, yes, META was the best performer and certainly did its share in lifting our major indices. But if you look at the Top 20 stocks (in the S&P 500 or NASDAQ 100) last week, you'll see it was much more than META:"
http://d.stockcharts.com/img/articles/2024/02/04/e56323bf-1cbb-4ad8-8582-fc8b5e0754ce.jpg
"There's a wide variety of sectors and industry groups represented on this Top 20 list. They won't get equal air time on CNBC, though. You'll hear how META and AMZN drove the market higher. That's not a false story, but it's an incomplete one.
I mentioned on several occasions last week how I believed that META and AMZN were going to report blowout numbers and they both came through. Check out their charts, especially their relative performance vs. their industry peers:
META:"
http://d.stockcharts.com/img/articles/2024/02/04/c36b76b1-ae1a-449d-b00f-4e245a1603dd.jpg
AMZN:
http://d.stockcharts.com/img/articles/2024/02/04/24ee79ab-e106-4f6e-a6b0-86ff9c02f3a7.jpg
"I believe there's a huge advantage heading into earnings IF a company is a leading stock within a leading industry group. I expect solid news from these companies and then it simply comes down to whether those strong results are already built into the stock price at the time of release. If not, we many times will see the type of reaction we saw on both META and AMZN.
I'm going to feature a company that reports this week in tomorrow's FREE EB Digest newsletter. I wouldn't be shocked to see a HUGE advance after earnings are released. I certainly expect numbers to come in ahead of Wall Street consensus estimates. If you'd like to take a look at this strong company, CLICK HERE to enter your name and email address, if you're not already a FREE subscriber. There is no credit card required and you may unsubscribe at any time."
Happy trading!
Tom
"....if a Chinese recession created major discontent among its youth, could all of that lead to desperation on China's part -- i.e.- could it ultimately become a catalyst for war?"
http://www.pretzelcharts.com/
"Today, I want to depart a bit from the usual topics of discussion and talk about something entirely different: China. (Or, as Trump might call it: "Chy-naa.")
As many readers probably know, Evergrande, the most indebted real-estate developer in the immediate Solar System, and possibly in the entire Milky Way Galaxy, defaulted on its debt in 2021, but was back in the news again last week when a Hong Kong court ordered its liquidation. Evergrande has $300 billion in liabilities and (theoretically -- who knows in practice with an insolvent entity) $240 billion in assets.
While this is not unexpected and likely already "priced in" (whatever that means, as if investors could possibly know how to "price in" an event like this), the liquidation process could impact investor confidence, not only in China's property sector but also more broadly in emerging markets.
China's real estate weakness, partially stemming from Evergrande's collapse (and, if Peter Zeihan is correct, China's larger demographics problem) and partially stemming from massive overbuilding, has been a significant headwind for China's growth. The has contributed to a decline in consumer and investor confidence, affecting China's economy.
The resolution of Evergrande's debts could, in the long run, help restore access to capital markets for Chinese firms, but the immediate effects might include further pressure on already fragile markets.
Parallel with that, the Chinese yuan has been experiencing a decline in value due its stuttering economy, widening yield differentials with other major currencies, and geopolitical tensions. The strength of the US dollar, driven by hawkish Fed policy, has also played a significant role in the yuan's weakness. China's central bank has taken measures to support the yuan, such as setting the yuan midpoint firmer than market projections and cutting the foreign exchange reserve requirement ratio (RRR) for financial institutions.
So here's where it all starts to get interesting: In the event the yuan ultimately continues to fall, the global playing field of the past many years begins to change: A weaker yuan can boost Chinese exports by making them more competitive internationally, which could potentially lead to trade imbalances with other countries. However, it also raises the cost of imports in China, which could impact global commodity markets and multinational companies with significant operations in China. Additionally, a depreciating yuan might lead to capital outflows from China, affecting emerging markets and global financial stability. It's also worth noting that the yuan's performance against a trade-weighted basket of currencies is an important indicator of stability for emerging markets, and a stable yuan can serve as an anchor of stability for these markets.
The slowing of China's economy has raised concerns about the possibility of a recession and its subsequent global impact. Several factors contribute to the economic slowdown, including the bursting of the property bubble, which has significantly impacted household wealth, primarily invested in real estate. With 70% of Chinese household wealth tied up in real estate, a major slowdown in the sector affects other parts of the economy.
We all know how things went when the U.S. housing bubble burst in 2006-2008 -- and it's worth remembering that it didn't happen overnight, even though many of us saw it coming.
The collapse of U.S. financial markets was gradual... then all at once.
China could be the same way.
Additionally, China faces challenges such as high levels of municipal debt and subdued household spending, which is among the lowest in the world as a percentage of GDP. These issues point to structural imbalances within the Chinese economy, heavily reliant on debt-fueled investment??. For many in China, particularly young graduates facing a record-high unemployment crisis, the economic downturn feels like a recession. The high youth unemployment rates, coupled with deflationary pressures and diminishing household wealth due to declining property values, contribute to a crisis of confidence that deters consumer spending and business investment.
In other words, this situation could potentially spiral into a self-feeding mechanism that erodes China's long-term economic potential??, and a recession in China would almost certainly have significant implications for global financial markets. As the world's second-largest economy, any major economic shifts in China can affect global supply chains, commodity prices, and overall market sentiment.
Emerging markets, in particular, might feel the impact more acutely due to their economic ties with China. A decrease in Chinese demand for imports can lead to lower export revenues for these countries, while a decline in Chinese outbound investment can reduce capital flows into emerging markets. Additionally, global investors might become more risk-averse, leading to increased market volatility and shifts in currency values.
The good news for the U.S. is that a recession in China would likely help end U.S. inflation (and may already be doing so) and, since China is The World's WalMart, might even be deflationary.
The bad news is that a Chinese recession could lead to a host of problems, such as supply chain disruption (since China makes most of the world's widget parts), falling commodity prices (since China is a major consumer of commodities), reduced demand for U.S. exports to China, slowing global growth, currency fluctuations and general instability.
All of which would almost certainly, in turn, negatively impact investor sentiment and could lead to a "risk-off" mentality. And the contagion potentials are almost certainly legion.
So, all that to say, it's worth watching heading forward. My thoughts about China this weekend led me to rethink my long-term TLT chart. Could a recession in China be the catalyst that ultimately leads to deflationary pressures that force the Fed to reverse course? It's worth remembering that last time we looked at TLT's chart, I noted that it had reached a major inflection point for a potentially-complete C-wave correction down. Could China make that complete correction a reality and lead to a final wave up in TLT -- before everything comes crashing down globally?"
And, beyond all that, if a Chinese recession created major discontent among its youth, could all of that lead to desperation on China's part -- i.e.- could it ultimately become a catalyst for war? Historically, that's the pattern many other countries have followed.
It's certainly food for thought. Trade safe.
Stock Market Commentary 02/02/24
By Lawrence G. McMillan
"After roaring ahead after breaking out to new all-time highs a week ago, $SPX finally had a setback of sorts. Poor earnings from some of the high-fliers (AMD, GOOG, MSFT) and of course the FOMC meeting conclusion combined to produce a sharp 80-point selloff on Wednesday. Most of it was regained on Thursday, though. But the market is still battling its way through news-related cross-currents: on Friday, it was positive earnings from AMZN and META, but an Unemployment Report that was "too strong" (thereby dampening hopes of a rate cut). Throughout this, the $SPX chart is bullish. There is support at 4800, which extends down to 4680, and as long as that area holds, the $SPX chart is positive.
Equity-only put-call ratios are technically still on sell signals, according to the computer programs that we use to analyze these charts. However, this appears to be a neutral reading to me. It won't really be bearish until it is clearly rising. So, these put-call ratios are not giving a strong signal at this time.
Market breadth had been fairly strong since January 18th, so the breadth oscillators were on buy signals. However, the negative action this week briefly knocked the breadth oscillator back down to sell signals. So, I'd say breadth isn't giving a clear signal at this time, but another day or two of negative breadth will produce sell signals.
Meanwhile, $VIX continues to hover at low levels. It didn't even have much of a reaction to the 80-point down day by $SPX. As a result, the trend of $VIX buy signal remains in place. As we've stated many times before: a low $VIX is not a problem in and of itself. It's only when $VIX begins to rise sharply that the problem arises.
Overall, we are still maintaining a "core" bullish position as long as the $SPX chart is positive -- that is, as long as $SPX is above 4800. We will trade other confirmed signals around that "core," and we may be seeing sell signals soon from MVB, equity-only put-call ratios, or breadth. But right now, those are not confirmed."
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1706901720458
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1706901720458
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1706901720458
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1706901720458
Thanks RCKS..Sure is a surprise to me to see SPX this close to 5K. Makes you wonder who will be the last sucker..LOL
"Just in: NFP was up significantly, well beyond estimates, so bulls will have to find some other excuse to spend money like Imelda Marcos in a Nike store."
http://www.pretzelcharts.com/
"Today is, of course, Groundhog Day, which means that if nonfarm payrolls are up significantly, we get six more weeks without rate cuts. Especially given that, on Wednesday, Fed Chairdude Powell, having lost a bet, was forced to give his press conference wearing an "Audit the Fed!" t-shirt while walking back some of his previous imminent-rate-cut nonsense.
Just in: NFP was up significantly, well beyond estimates, so bulls will have to find some other excuse to spend money like Imelda Marcos in a Nike store.
Chart-wise, SPX did test the red support line and it held, so far:"
"Near-term, SPX seems to have widened its uptrend channel. Bears would need to sustain a breakdown there to start things moving in their direction:"
"Beyond that, not much to add to Wednesday's update. Trade safe."
Pretzel :
(1) Pretzel presents both a Bull and Bear case.
(2) Pretzel gives both Triggers and Targets
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